Corporate Vision

Supporting the Earth andGreening the World

The Tao in its regular course does nothingfor the sake of doing it, and so there is nothing

which it does not do.

 

Following more than a century ofexploration, breakthroughs and rapid strides, China has transformed from asizable coatings producer into a coatings superpower. As the quintessential brandof the Chinese coatings industry, 3Trees sees going global not just as the onlypath to enterprise development, but also as a way for Chinese enterprises toserve the nation. With the Belt and Road” Initiative and the strategic deployments for the newwave of reform and opening-up, China is embracing the world with unprecedentedopenness. “He who follows the way of the Tao will draw the world to his steps.”In response to the national strategy, 3Trees sets its eyes on becoming one ofthe world’s top five coatings brands in three to five years and one of theworld’s leading brands in five to ten years. To this end, 3Trees will be guidedby culture and strategy and will use talent and capital as powerful tools inits international outreach program; it will also strive for robust and rapidbusiness expansion by “going global” and “bringing in”. This is how 3Treespeople will fulfill their duty to their nation through industry. 3Trees willnot only market its products and services around the world, but also spread its“Taoist natural culture” across the globe. By advancing the healthy, ecologicaland environmentally friendly concepts around the world, 3Trees will achieve itsvision of “supporting the earth and greening the world”.

 

Rooted in Nature and Eyeing the World

The Chinese people aspire for a healthy,natural and green environment, so do all other people around the world. 3Trees’“Taoist natural” operating philosophy and its corporate mission of “makinghomes healthier and cities more beautiful” dovetails perfectly with the needsof humanity. This builds a solid foundation for 3Trees to achieve its vision of“supporting the earth and greening the world”.

 

Integrating into the World and Embracing the RMB100 Billion Dream

Globalization means that everything, fromindustry, talent, cooperation and culture, is globalized. 3Trees will not only“go global”, but also “bring in”. First, it will bring in international talentto pave the way for its internationalization. Second, it will deploy its supplychains and channels across the world through capital operations in order tomarket its products globally. Third, it will pursue technology, trademark andequity cooperation to achieve multi-level, open-style international cooperationcharacterized by technology and channel sharing, and it will advance its globalizationwith an open mind. Last, it will remain focused on “Taoist naturalness” andstrive to draw upon world cultures to build a unique culture of inclusivenessand harmony and create an extended international family; together, we willendeavor to realize the dream of RMB 100 million in sales.

 

Serving the Nation by Buidling a RespectedEnterprise with Global Influence

The Chinese Dream is manifested in the riseof the nation in all aspects to lead the world. The

realization of the Chinese Dream must bebased on a solid economy. The rise of China’s economic

strength means the rise of Chinese brandson the global stage; without the rise of Chinese brands

across all industries, the Chinese Dreamwill be elusive. In this sense, the Chinese Dream is the

dream of the rise of Chinese brands. As anational brand in the coatings industry, 3Trees remains

committed to serving the nation by buildingan internationally recognized brand. We are confident that our vast andprofound Oriental wisdom, coupled with Western management practices and technology,will endow our national enterprises with the strength, ability and courage tocompete with world brands in the international arena. 3Trees has full faith inthe power of brands, and only by building an extraordinary brand can 3Treesstays on the top of the global coatings industry. 48 3Trees will devote all itsresources to the global market and build itself into the benchmark enterpriseamong Chinese national brands in its bid to realize its vision of “supportingthe earth and greening the world”. 3Trees has made a pledge to the future world– it will draw the eyes of the West to the East and become an exemplaryenterprise for Chinese companies.

 

Strategic Planning for3Trees (2018 - 2022)

On the basis of a thorough study of thecurrent state of the domestic and international coatings markets, as well as anextensive review of global economic development conditions and the globalcoatings development trends, 3Trees commissioned McKinsey to formulate astrategic development plan for the period from 2018 to 2022.

 

Strategic Opportunities

1. From the global point of view, theEuropean and U.S. economies will continue to see an annual growth rate of 1% to3% in the foreseeable future, while China’s economy will maintain a growth rateof 6% to 7%. At this rate, China will overtake the United States to become theworld's largest economy in 15 years, becoming the undisputed biggest engine ofgrowth in the world in the 21st century (the U.S.’s 2016 GDP amounted to USD18trillion, compared with China’s USD 11 trillion).

 

2. China is expected to become the world’slargest coatings market with the biggest increase in coatings consumption.China’s enormous economy and rapid growth have created incredible marketopportunities for the Chinese coatings industry. There is vast room for growthfor the coatings industry in light of the “Belt and Road” initiative, theXiong’an strategy, the Yangtze River Delta and Pearl River Delta Bay AreaStrategy, and the west China development strategy, as well as numerous worksrelating to underground pipe corridors, high-speed railways, urbanization, newrural construction, renovation of old houses, military development, andnational defense. The World Paint and Coatings Industry Association (WPCIA)predicts that the annual composite growth rate of the global output value ofcoatings will remain above 5% by 2020. Asia-Pacific, Europe and North Americalead the global coatings industry, with Asia-Pacific accounting for more than40% of the industry, the highest percentage among all regions. At present,China is the world’s largest coatings producer. According to data from theNational Bureau of Statistics and the China Coatings Industry Association, theindustrial enterprises in China’s coatings industry which were above thedesignated scale produced a combined total of 18.9978 million tons of coatingsin 2016, accounting for roughly 29.24% of the global output of 64.575 milliontons, the highest amount in the world. In the global coatings market, which hasan annual value of RMB 1 trillion, there are already two enterprises each withannual sales of RMB 100 billion. With the rise of China, a Chinese coatingsbrand with annual sales of RMB 100 billion is bound to emerge within the newfew years.

 

3. China’s coatings industry is facingremarkable opportunities for restructuring. First, the growing demand of thepeople for a better life, the emergence of a middle class with 250 million people,and the rise of a new generation of consumers, mean that individualisticconsumption, quality consumption and service consumption are becoming megatrends, and that enterprises who fail to follow these trends will be driven outof business. Second, the increasingly stringent 53 national environmentalstandards are driving the consolidation of the domestic coatings market, and alarge number of small and medium-sized coatings enterprises that do not meetthe standards will be closed or merged. Third, the domestic coatings marketremains fragmented, with no absolute monopoly; yet, the coatings industry hasthe highest profit rate in the building material sector, and there are fewpromotional events in the retail markets. The above two trends and the industrystructure mean that there are vast room for growth and remarkable consolidationopportunities for enterprises whose brands are recognized for greenness andhealthiness and which have the capacity to provide custom-made products.

 

4. The opportunity for consolidating theglobal coatings market is enormous. Since they reached maturity, internationalcoatings enterprises have seen slower growth; they grow by 3% a year at most.In the age of fast fish eating slower fish, this opens up a globalconsolidation opportunity for the rapidly rising Chinese brands.

 

Strategic Advantages

1. Outstanding corporate culture management system;

2. The premier Chinese brand of coatings and premier healthy coating brandin the mind of consumers;

3. The number-one stock in China’s commercial coatings industry;

4. Full-channel coverage, including top 100 real estate enterprises in Chinaas its channels, such as Evergrande, Vanke, China Overseas, etc., and 5,000+dealers, 20,000+ decoration paint sales outlets, e-commerce O2O and overseasoutlets;

5. Heavy investment in product research and development (R&D) andstrong R&D capability; a national-level R&D center, post-doctoralmobile work station, academician work station, state-approved testing centerand a large number of invention patents, enabling the creation of “Health +”standards and one-stop product system;

6. It has become an exemplary enterprise for service-oriented manufacturingin Fujian Province by building the “ready-for-move-in” home decoration servicesystem, the 54 county and town-level engineering special service system, theengineering construction service system and the 361° dealer service system;

7. It has completed its overall arrangement of factories and multiplepowder material processing cooperative factories in Fujian, Sichuan, Tianjinand Henan and it will completed such arrangement in Hebei and Anhui in order tobuild a competitive supply chain;

8. One of the first enterprises to meet the implementing standards forinformation orientation and industrialization integration system in China; aleading enterprise in terms of information technology (IT) and ability in theindustry;

9. It has a professional and aggressive elite team;

10. Tremendous social influence.

 

Strategic Idea

With persistence in development based inChinese markets, 3Trees will first conquer China’s domestic markets and thentap into global markets.

 

With persistent focus on products andservices in terms of environmentally-friendly, energy-conserving and healthynew materials which center on decoration paint, engineering paint, wood warepaint and auxiliary materials, 3Trees will become an ecological industrialchain group with vertical integration and moderate horizontal diversificationthrough capital operation.

 

With persistence in the high-end brandstrategy, 3Trees will keep its customer orientation through launch of high-endproducts and push forward quickly.

 

Overall Goal

3Trees will strive to become one of the topten coating brands in the world in 3 to 5 years and be a global leading brandin 5 to 10 years. It will meet its goal of securing annual sales in excess ofRMB 10 billion and realize its dream of achieving annual sales in excess of RMB100 billion so that 3Trees will support the earth and greening the world.

 

Implementing Approach

With corporate culture as the core andbrand as the guide, 3Trees will create its barriers to enterprise competitionand build its core enterprise competitiveness through multi-dimensional approaches,such as optimizing channel distribution, improving product performance andservice level, increasing customer profitability, upgrading lean supply chain andstrengthening capital operations, in order to push itself into globalizedmarkets gradually and achieve rapid and sustainable development.

 

1. 3Trees will build its core culturalcompetitiveness and strong brand. It will upgrade its corporate culture systemfeaturing customer orientation, win-win cooperation with partners and sharingwith fighters by adopting integrity, environmental protection, safety andquality as its baselines of business operations, creating ecological corporateculture as its core enterprise competitiveness and enriching and upgrading the“healthiness” of its brand to “environmental friendliness”, “life” and“responsibility”.

 

2. 3Trees will create all-round coverage ofchannels and outlets. By pushing forward the win-win partnership model, it willestablish tens of thousands of decoration paint outlets with a focus on uniquedealer profit model and decoration paint single-store profit model and createchannels with top 100 real estate enterprises and top 1000 dealers in order toform a three-dimensional distribution network featuring multiple levels from village,town, county, city to province levels and omni-channel from online to offline.

 

3. 3Trees will offer ultimate products andservices. With an emphasis on research and development, it will launch anintegrated product system by following the concept of ultimate health,performance and application. Additionally, it will also launch anindividualized whole-house coating custom-made model with advanced informationtechnology and provide an

integrated solution for coating, waterproof and heat preservation for 56 systematic use of engineering and realestate projects.

 

4. 3Trees will build a leading supplychain. It will create the best supply chain system in the industry with the objectiveof using the lowest supply chain costs in the industry. It will push forwardthe building of the IT system centering on C2M model in combination of capitaloperation approaches and scientific distribution of supply chain network andachieve lean and intelligent manufacturing to build its competitivenesscharacterized by quick production and delivery and low costs. Moreover, it willre-create its enterprise operation system and soft competitive barriers withcustomer

orientation.

 

5. 3Trees will go for moderatediversification with a focus on its main business. By  focusing on  the  products and  services  in terms  of environmentally-friendly,energy-conserving and healthy new materials which center on decoration paint,engineering paint, wood ware paint and auxiliary materials, it will become anecological industrial chain group featuring vertical integration and moderatehorizontal diversification through capital operations and set foot in the areasof water proof, heat preservation, UV boards, Internet home decoration, etc.

 

6. 3Trees will build a top-notch team. Itwill attach importance to talent introduction and development and enhancementof its employees to create an employee team with common mission, cohesion,teamwork and high executive ability.

 

7. 3Trees will create a favorable externaldevelopment environment motivated by great love. It will care about nature andbuild beautiful homesteads by protecting mountains and waters and resources;aiming for development in a green way, with awe for nature, it will create anenvironmentally-friendly supply chain to reduce damage to nature; it willstrive to be a good corporate citizen and perform its social responsibilitiesto make its customers satisfactory, its partners profitable and its employeeshappy by 57 paying taxes, giving back to the society, helping poverty-strickenand disadvantaged people, doing good deeds, etc.




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